ICE Eyes All-to-All Bond Trading
The Intercontinental Exchange plans to dive into the all-to-all corporate credit trading model with its planned $400 million purchase of Virtu BondPoint, according to exchange officials during the firm’s third-quarter earnings call on November 2.
“Coupled with our existing dealer platform, it will enhance our solutions suite in the fixed income market that is rapidly automating and seeking efficiencies that electronic solutions can bring,” said Jeffrey Sprecher, chairman and CEO of the Intercontinental Exchange. “By leveraging ICE Data Services’ continuous evaluated pricing and analytics suite as well as ICE’s existing technology distribution, BondPoint will be uniquely positioned to contribute to our track record of bringing transparency and innovation to the global markets.”
BondPoint’s purchase will bring a different client base to ICE’s credit trading platforms, according to Sprecher. “BondPoint is a dealer-to-wealth manager platform, and those people are not historically in the ICE ecosystem.”
He also noted that it not only would bring new clients looking to trade, but potential customers for ICE’s analytics, data sales, network connectivity services, desktops, and other offerings.
“I think it will be very additive,” he said.
ICE first jumped into the corporate debt secondary market when it purchased credit default swap broker Creditex Group in 2008 for $625 million in cash and equity.
More recently, the exchange operator launched its ICE Credit Trade electronic interdealer corporate bond platform, which uses a sessions-based trading protocol, in 2015.
“We think those two will work well together, particularly given the direction that regulation is going in the bond space, which is pushing things towards more transparency,” said Sprecher. “But it also protects the inventory capabilities seemingly of the dealers in terms of liquidity that they will be able to provide long-term to the markets.”
ICE and Virtu Financial expect to close the deal in the first quarter of 2018 pending approval by market regulators.
Deal gives ICE CEO Sprecher another platform for expansion in fixed income.
Institutional corporate-bond investors have a lot of catching up to do.
Direct Match and Trading Places Founder Jim Greco assesses potential suitors for the Virtu corp-bond unit.
Corporate bond liquidity may spur the regulator to act.
The exchange operator takes a minority stake.